What does a venture capitalist actually DO every day?
Hi everbody. Thank you for your help with my question. I heard about the career of venture capitalist in school and wanted to know what a venture capitalist actually does every day. Like I understand that you make investments but what are you doing while you're deciding how to make them or making them? I dont know if you know the show Shark Tank on TV, but the people there make investments too, but that can't always be what it is like for everyone. So what does the actual work look like? #finance #investment #venture-capital
Venture Capitalist's job entails 3 primary responsibilities:
1- Find new investment opportunities
2- Evaluate these investments
3- Help existing portfolio companies (companies they have already invested in)
Most new investment opportunities come from trusted sources such as entrepreneurs in the community/portfolio, other investors and friends that know folks starting companies. Entrepreneurs may reach out to you directly as well (or meet you at an event), but most of the deal flow comes through warm introductions. VCs spend a big part of their day building and nurturing relationships so their network sends them good deal flow -- i.e. startups looking for venture capital.
The diligence process for opportunities can range anywhere from a couple of weeks to several months. Generally, the process entails the entrepreneur pitching the VC on why the problem they are solving is worth solving and they are the right team to do it. The VC then has to get educated about the market/team/product to figure out if this is a good investment. I spend a good part of my day doing diligence on 1-2 really interesting companies by talking to folks in my network and figure out if we should invest in these companies.
Once you make an investment, you work with the company on several strategic pieces including, but not limited to, hiring, sales, finance, etc. depending on company needs.
There are some other elements of the job such as raising capital for the fund, building a brand, etc. but those usually take up much less time than the 3 primary responsibilities I outlined above.
Venture Capitalists do several primary things. First they review the organizations that they are already invested in to see if the are on track and meeting the goals for the companies and provide input and direction to help them be successful. The second is they review new potential investments to see if they are a company which they feel fits the investment areas for the VC.